Common Mistakes to Avoid While Applying for Gold Loan

Gold Loan is a loan against gold, taken by a borrower when in need of funds urgently. The lender lends the money to the borrower by pledging their gold jewellery and articles. It can be anything from ring to necklace with the range of 18 to 24 carat.

Usually, the loan amount that is being provided by your lender is a certain percentage of the gold that you decided to lieu. It goes up to 80% of the total amount based on the current gold value in the market and the quality of the gold. But when it comes to applying for a gold loan, a few things need to be kept in mind for a seamless and profitable deal. Here are a few common mistakes that you should avoid while applying for a gold loan.

When in urgent need of money, taking a gold loan is the best option available. It is similar to a personal loan that helps you meet your financial requirements. It can be a marriage expense, paying urgent medical bills, education fees, or buying a house. Whatever your reason is, you can take a gold loan easily. It is a prevalent type of loan used by many people in India and around the world. You won’t need a lot of documents if you are planning to take a gold loan because of how secure it is. You will only need to give the lender your pledged gold. Since gold serves as collateral, the interest rates compared to personal loans are on the lower side.

Some of the few common mistakes that you need to avoid are:

1.       Not checking the terms and conditions- More than 90% of the people do not read the terms and conditions of the product they are purchasing. Reading the whole T&C written in tiny letters seems like a waste of time, leading to you paying more money as interest. When it comes to gold loans, it is essential to check each term and clause if you want to save as much as possible.

2.       Not doing thorough research- Now that everything is available online, why go through all that trouble of going to different places and checking their rates. Doing your research is important while taking a gold loan. You can also apply for gold loan online if you’d like. Some gold loan providers have an increasing interest rate, which means the interest rate may go up after a certain period.

3.       Unaware about the company policies- Many companies say that they provide the lowest interest rates in the market. Still, you may be paying more after the whole calculation subject to T&C. Some companies are known to charge jumping interest rates, which means the amount of interest jumps as time passes or whenever you miss paying your monthly interest payment.

4.       Not knowing your gold- Knowing your gold value and everything about it is essential to take a gold loan. If your gold jewellery is studded with gemstones, they don’t consider the value of the gemstones. Also, gold bullions, bars and gold coins above 50 grams are not accepted as collateral by financial institutions and banks. So, it is essential to know your gold before you apply for a gold loan.

These are some of the key mistakes you should avoid while applying for a gold loan. It is easy to avail the loan from any bank or financial institution to fund your financial requirements. 

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Created on Nov 26th 2021 01:05. Viewed 282 times.

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